Prosper first for common prosperity
In August 2021, in the midst of the Covid crisis, the Chinese president revived a phrase dating back to 1953: common prosperity. With this slogan, Xi Jinping was seeking to promote a more equitable economic development model, without a significant wealth gap. While China has seen the strongest growth in the number of centimillionaires in the last 10 years,[1] this message from Beijing was perceived as a new attack on the richest, most of whom are entrepreneurs. The tech sector seemed to be a particular target, as it has already been under regulatory pressure since the cancellation of Ant Financial’s IPO in 2020, with multiple obstacles and countless fines imposed on companies. The private sector’s response to this reference to common prosperity was swift, including the creation of charities, participation in the financing of public projects and the creation by internet giants Tencent and Alibaba of foundations, each endowed with 100 billion yuan. With their expansionary zeal curbed, Chinese companies then focused on cost management and structural reorganisation.
What China had undoubtedly underestimated was the importance of the private sector for its economy, which can be summed up in four figures: 60/70/80/90. The private sector accounts for around 60% of China’s GDP, 70% of its innovation capacity, 80% of urban employment and 90% of job creation. By seeking to rein in the private sector, China weakened its economy, already impacted by the pandemic and US sanctions. The crisis of confidence that took hold in China affected the private sector, consumers worried about their jobs and investors, with the private sector accounting for 70% of the MSCI China.
In September 2024, Beijing changed its tune. While the authorities took care of the economy with a monetary, banking, property, fiscal and stock market action plan, they did not forget to emphasise the importance of the private sector. In January 2025, it was Deepseek, the Chinese answer to ChatGPT, that put the private sector back at the heart of the national strategy. DeepSeek proves the innovative capacity of Chinese technology, despite the economic slowdown and obstacles at home and abroad. This revelation was all the more significant as others have followed, with the announcement of Alibaba and Apple’s partnership on AI and that of BYD on autonomous driving. The symposium chaired by Xi on 17 February brought together the cream of Chinese entrepreneurs, founders of key groups such as Tencent, Xiaomi and Alibaba, and start-ups such as DeepSeek and Unitree Robotics. Prosper first for common prosperity. His message was clear: for the rich to contribute to common prosperity, Beijing must let them get rich. To put the money where the mouth is, a bill has been proposed to ban arbitrary fines on private companies, and the regulator has approved Baidu’s purchase of JOYY’s streaming business, which was rejected in 2020. There are even rumours that Ant Financial may make another attempt go public, which would be a powerful signal.
This return to favour of the private sector has been welcomed by investors, as evidenced by the 15% rise in the MSCI China since the beginning of 2025 (nearly 40% year on year) and the 30% rise in the Chinese tech index HSTech over the same period. While the market was desperately waiting the Chinese economy to be rescued by stimulus, the only stimulus really needed in China is undoubtedly the unleashing of its private sector.